Post on 19-Aug-2018
A Basic Definition for a “Shopping Center”
“…a group of architecturally unified commercial establishments built on a site that is planned, developed, owned and managed as an operating unit related by its location, size, and type of shops to the trade area that it serves. The unit provides on-site parking in definite relationship to the types and total size of the stores.”
ULI Community Builders Council, 1947
Elements of the Well-Planned Shopping Center
Unified architectural treatmentUnified siteEasily accessible location within the trade areaSufficient on-site parking
Service facilities for the delivery of merchandiseTenant mix and grouping that provide synergistic merchandising among storesComfortable surroundings for shopping
Types of Shopping Centers
Major Typesconvenienceneighborhoodcommunityregionalsuper regional
Major Type Variationsspecialty centersoutlet centersoff-price centerspower centersoff-price megamallsfashion centersfestival centers
New & Innovative Approaches
Retail uses in MXD3+ revenue producing uses (retail, office, hotel, recreation, etc.)significant physical & functional integration, including pedestrian connectionsdevelopment conforming to a coherent plan
Transportation-Integrated Retailing
serving the “captive markets” of commuters and intracity travelers at mass transit stationsallow transit systems to capture additional revenues through
joint development of station propertyincreased ridership by providing a more pleasurable experienceincreased property and sales taxes
Shopping Center Feasibility Study Components
Market analysisFinancial analysisSite selectionCommitments from key tenantsA leasing planFinancial considerationsZoning, subdivision, environmental & traffic impact, and other public approvals
Source: Almanac of Business and Source: Almanac of Business and Industrial Financial RatiosIndustrial Financial Ratios
Major Sources of Funding for Shopping Centers
Life insurance companiesPension fundsBanksS&L’s and savings banksFinance and credit companiesInvestment banks & securities firmsReal estate investment trusts (REIT’s)SyndicationsGovernment fundsForeign investors
Options for Debt Financing
Construction loansConstruction loans with “miniperms”Participating mortgagesLand sale/leasebacksLeasehold financingPublic financing programsConvertible mortgages
Options for Equity Financing
Joint venturesLimited partnershipsPresale agreementsReal estate investment trusts (REIT’s)
Issues of Retail Market Demand Analysis
Area demand evaluation, or economic base analysis (identifies underlying economic and demographic structure of the area)Direct consumer research on shopper attitudes, preferences and spending habitsAnalysis of competitive alignment of the marketTrade area definition & evaluation (focuses the other three measures on a particular location and forecasts sales performance)
Consumer Expenditure Survey Reference Units
Age of Head of HHComposition of HHEducation of Head of HHHousing tenure, type of area & race of Head of HHHH Income before taxes
# of earners in HHOccupation of Head of HHOrigin of Head of HH (white, black, Hispanic)Region of residenceSize of HH
http://www.bls.gov/cex/home.htm
Consumer Demographic Thresholds Neighborhood Shopping Center
Minimum Population Support Required = 3,000 – 40,000Trade Area Radius = 1 – 3 milesIncome Spent on “Food Eaten at Home” = $11,100,000 (2004 $)
Rank Ordered Tenants for Neighborhood Shopping Centers
/--------------- Medians -------------\Tenants SF in GLA Sales/SF Rent/SF
Supermarket 31,500 339.55$ 6.53$ Dry Cleaners 1,500 134.23$ 13.66$ Restaurant (w/liquor) 3,381 228.12$ 13.50$ Woman's Hair Salon 1,200 132.07$ 11.74$ Pizza 1,500 147.37$ 12.05$ Drugstore 9,100 305.46$ 7.60$ Medical/Dental Office 1,607 12.09$ Unisex Hair Salon 1,306 159.88$ 13.69$ Videotape Rentals 3,675 88.60$ 11.15$ Finance Company 1,414 10.25$
The Untapped Consumer Markets in Inner City Neighborhoods
Despite the huge retail purchasing power of their residents, many inner city neighborhoods suffer from significant “out-shopping” - they have too little retail to meet the demand, and tap the buying power of their own residents.Therefore, the challenge ahead is to create a “virtuous cycle of retail” in inner city areas -to promote business growth, jobs and savings.
General Impacts of Inner City Business Development
Expanding employmentImproved consumer servicesStimulating new business marketsCatalyzing real estate rehabilitationCreating role models and community leaders
A Goal For Inner City Retail Revitalization
The goal is not to generate a consumption binge by those who most need to build more assets and get ahead.Nor is it to divert buying power away from the businesses outside the cities.The goal is net gain created by
businesses move into inner city neighborhoodshiring local residents--> raising local incomeshigher incomes allow both more saving & more spendingmore hiring raises income and consumer demand
The Virtuous Cycle of RetailThe Virtuous Cycle of RetailThe Virtuous Cycle of Retail
Businessesmove intothe inner
city
Businessesmove intothe inner
city
Localresidents
hired
Localresidents
hired
Local income,saving &spendingincrease
Local income,saving &spendingincrease
Sustainableeconomic
development
Sustainableeconomic
development
More assets& qualityshoppingcreated
More assets& qualityshoppingcreated
Strongertax basecreated
Strongertax basecreated
Morejobs
created
Morejobs
created
Concentrated Buying Power - the Density of Demand in Cities
The income of an individual household is less important to retailers than the combined income of everyone in the neighborhood.
Aside from aggregate, untapped retail demand, urban locations typically offer a critical advantage for retail businesses: density of demanddensity of demand.
The higher population density of most inner city neighborhoods balance out the high household incomes in spread out suburban areas.